With its real estate business getting back on track, Mumbai-based DB Realty has decided to not take up any new hospitality projects and shelve earlier plans.
Properties that have already been developed and are running will be retained by the company, while those in the pipeline will either undergo change of use or get divested.
Vipul Bansal, chief executive officer, DB Realty, said, “Hospitality is not the focus area and there is no plan really to expand the hospitality asset portfolio anymore. Projects where work has not started will either get converted into residential developments or we will get rid of them. The focus will purely be on the realty business.”
Without divulging details, Bansal said a development in Pune will get converted to residential project while the company will sell up to 49% in the land parcel (7.7 acre site) at Delhi International Airport’s (DIAL) new hospitality district.
The plot at DIAL is under DB Hospitality Pvt Ltd, a group company in which DB Realty hold 49% stake. Earlier plans were to house four hotels and a large convention centre. However, plans were restructured later to develop 1.3 million square feet of the plot featuring a hotel, a convention centre, serviced apartments along with 300,000 sq ft of high-end retail space.
“It’s a very ideally located land with roads on three sides. We are not developing it anymore so whosoever comes in as a strategic partner will decide its configuration,” said Bansal.
On reports about the company looking to sell operational hotel projects in Mumbai and Goa, Bansal said there were talks earlier with an investor to sell a minority stake.
“These are big landmark hotels, something that we’d like to retain,” said Bansal.
The Park Hyatt hotel development that was to come up at the company’s Charni Road, Mumbai, site has also been put on hold.
The company owns a small hospitality asset in Mundra (Gujarat) and another 50-odd guestroom property in Rajasthan, which are on the block for a while.
“If some body wants to buy we are more than willing to sell. However, there is no stress in the system anymore. Our banking lines are already open to meet day-to-day requirements. It is business as usual and any stake sale in our hotel projects will be purely opportunistic,” said Bansal.
On the residential front, the company has concluded sales worth about `800 crore in second half of the last fiscal.
The realtor is in advanced stage of getting key approvals for its 4-5 projects in Mumbai and expects to launch them in 6-8 months. The company will hit the market with 5-6 million sq ft in Mumbai at prices exceeding Rs 30,000 psf.
“We are talking about Rs 15,000 crore of fresh inventory in the market, which is very huge for us. We are very comfortable with Rs 500 crore debt as we have cash flow of Rs 70 crore every month. All our inventory is paid for so we don’t need to do any of the things done by other players in the market,” he said.
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